More than a year ago, word of the “Great Resignation” dominated headlines in business and industry trade media. Most of the blame, of course, rests with the ongoing COVID-19 pandemic. It’s a health crisis that has taken more than a million American lives, while also affecting the health of all industries around the world.
Now, as we appear to be emerging from our worst healthcare crisis in a century, many experts have assumed that people would eagerly return to work. But that is simply not happening. If the lack of workers weren’t enough, the problem is compounded by the worst inflation in our country in 40 years. By definition, inflation is the result of too many consumers buying too few goods. And the root of too few goods lies in the supply chain, not just in a shortage of microchips or wheat, but also a lack of workers in every part of the spectrum.
Talent issues in the supply chain and other industries were a problem long before the pandemic. There were fears over the impending “Silver Tsunami” of retiring Baby Boomers, different expectations of a younger generation entering the workforce, and a lack of STEM talent to keep up with the ever-increasing need for tech workers.
A look at the year 2018, just before the pandemic, reminds us that we were already facing a global talent crisis across all industries and job levels. A 2018 report by Korn Ferry projected that, by 2030, the U.S. could experience unrealized revenue of $1.748 trillion due to labor shortages — equivalent to 6% of the country’s entire economy. The same report said U.S. job vacancies hit a record high in 2017, exceeding six million openings per month. Also in 2018, a survey by global shipping company DHL found 70% of respondents saying that the profession lacked status and opportunities for career growth. That same year, consulting firm Deloitte wrote about the increasing complexities of supply chains, noting that the less linear and more interconnected supply chain is driving significant demand for professionals at all levels.
Then the pandemic struck, and a very bad talent shortage problem got much worse. In March, 2022, four years after the Korn Ferry and DHL surveys, the U.S. Department of Labor reported 11.3 million job openings, 6.5 million hires, and 6.1 million separations, which includes the 4.5 million workers who actually quit their jobs. Americans revealed their greatest reasons for quitting in the last year were low pay, lack of career advancement opportunities, and a feeling of being disrespected at work, according to a recent report from Pew Research Center.
Once very much behind the scenes, the demand for supply chain talent is now front and center. Companies are recognizing the importance of the supply chain for their success and, for some, survival. We’ve also seen rapid changes through digitization and other technological advances, which adds more limitations on workforce options. According to a 2021 report by MHI with Deloitte, the adoption of more sophisticated supply chain solutions is increasing dramatically due to the impact of COVID-19 disruption, with 49% of supply chain leaders having accelerated spending in digital technologies.
But technology is a double-edged sword. We want automation to improve efficiencies and offset worker shortages, but we need IT-savvy talent to do it. Demand for software developers, including software engineers, will increase to 22% between 2022 and 2030, according to the U.S. Bureau of Labor Statistics. This percentage is almost 4% more than the growth of average careers. In the next 10 years, there will be about 189,200 job openings for software engineers annually.
Additionally, there will be an even greater need to attract more skilled workers who are adept at extracting tvalue from these newly implemented technologies.
So while we recognize the importance of technology as a problem-solving contribution to the talent shortage equation, we should also recognize that a computer can’t drive a truck or have a meaningful conversation with a customer to solve a delivery issue. The talent shortage in our industry runs broad and deep. We’re not at a point where we can replace humans with technology to fill this void. At the core is recognizing the value of everyone’s role, no matter how great or small.
Following are some actions that companies should be taking:
As we’ve seen over many years, the shortage of talent across all sectors and employee layers is a chronic challenge that won’t go away and is likely to worsen before we see improvement. CEOs need to think about supply chain as a clear enabler for their success. They need to think end-to-end, and focus on resilience. Supply chain is the most cross-functional part of your business, so you need to ensure that procurement, manufacturing, marketing and distribution are all working together. Employers need creative solutions that include seeking out skilled, dependable nearshore and offshore talent where it’s readily available.
Robert Cadena is chief executive officer of Lean Solutions Group.
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